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The Australian Small Business Blog

Tuesday, January 11, 2011

Buying a Business In Australia

People are buying businesses in Australia for a variety of reasons, and the most compelling one is the vibrant Asian market, which is attracting the interest of investors everywhere. Currently, the upfront fee for establishing a new business, paid to the Australian Securities and Investments Commission, has been lowered from $800 to $400, providing entrepreneurs with an additional incentive to invest.

Here are some essential steps to take when searching for a business for sale:

* Decide the kind of business for sale you want to buy and develop a five-year plan. This will enable you to project future earnings, develop a method for reaching your goal and find an enterprise that stands out from the rest. For example, since Australia is such a vast country and travellers have many needs, you might want to look into bed-and-breakfast sites, motels, hotels and caravan parks. Though these niches can be seasonal, they are highly profitable.

* Shop for businesses that are on the market, preferably through reliable online websites. Business for sale website usually include easy to use search tools allowing you to fine tune your search connecting you directly with businesses in your desired niche and price range. These listings are usually uploaded by the business owner and buying privately can be an advantage and it is best to consult an attorney to draw up the required contract for transferring ownership. This will ensure that all of the legal documentation is both complete and accurate.

*You may also want to work with a business broker. Just like buying or selling privately, utilizing the services of a broker also has its advantages. Brokers can negotiate on your behalf, which sometimes makes this step less stressful for both parties.

* Creating a financial is crucial. You should contact various groups, such as the Council of Small Business Organisations of Australia or the Small Enterprise Association. They can assist you in becoming properly licensed and completing the paperwork needed to start a new business.

* Whether you buy an established business or you have decided to start your own, it is safe to say they some financial assistance will be needed. In order to arrange for a commercial business loan, be prepared to declare your assets and liabilities, submit bank statements and know your credit score. Determine the amount you need to purchase the business and be ready to supply some personal information, including pay stubs from your current employer. Always remember that the banks are willing to negotiate as they want your business and make sure you shop around.

Buying an Existing Business

You will find that there is less financial risk in buying a business that is well-established when compared to starting a new one from scratch. As a rule, financial institutions are more willing to extend credit in this situation because the income from the venture and its earning potential can both be determined. With this in mind, the current owner should be prepared to provide documentation of its financial status.

Note that a going concern also has a well-established base of loyal customers, and as the new owner, you will be able to take advantage of that and have a steady stream of income from the day you close the deal. In addition, the current employees who stay with the business may prove to be very helpful when you assume ownership because they will have a vested interest in your success. They have also established relationships with customers or clients, are used to the daily routine, and are well aware of the company’s various policies and standards.